By Tiernan Ray

Goldman Sachs’s Matthew Fassler today reinstates coverage of Best Buy (BBY) shares with a Neutral rating, which the firm has not covered since November.

Writes Fassler, against a backdrop of consumer electronics sales “lagging virtually every other major consumer segment,” according to U.S. government retail data through February, there is the added burden that the transparent pricing of electronics that is happening in online sales is putting pressure on retailers’ gross profit, including that of Best Buy.

And there is more sales shifting to online, exacerbating the challenge for chain stores.

Analyzing each of Best Buy’s product categories, Fassler sees a negative one half of one percent market growth for Best Buy’s industry this year, and a drop of 1% in terms of Best Buy’s year-over-year comp-store sales results.

His model, moreover, assumes some things that could still turn out worse than he’s expecting, such as flat year-over-year same-store results for TVs.

PC sales may be down 7%. And while tablet computer sales may be up 30% for Best Buy this year, “swapping TVs for tablets would likely prove dilutive for margin rate, and not help gross profit dollars materially.”

Still, the stock has a silver lining. With a mere 19.7% “payout ratio,” and “solid” cash flow, Best Buy could hike its dividend 50%, which he expects may happen. And the stock is at the lowest 2012 P/E of any stock he covers (8 times), and the lowest EV/Ebitda multiple (3.4 times), despite having the highest free cash flow yield (11%).

About Tech Trader Daily

Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.